Chairman's Message

The year 2009 has been a significant year for Fortis Healthcare (India). There have been many milestones achievements including our first international foray and the company declaring its maiden profit after tax since inception. These achievements have been a result of a clear vision, strategy and execution led by a strong and competent team (of managers and staff) in the company. I would like to take this opportunity to share our joy with each and every one of you for this performance.

We need to actively align ourselves with the needs of the Indian healthcare sector which has some positive characteristics along with many challenges. A long term positive growth phase, a focus on public-private partnership and encouraging realities. On the other hand, the lack of a quality focus on medical care, shortage of skilled & trained manpower, lack of accreditation/certification are challenges that require urgent attention.

Healthcare sector experiencing a long term growth phase :

The healthcare industry is witnessing a period of sustained growth. For the last few years the industry is growing at 15% per annum and the same trend is estimated to last for another decade or more. This is driven by the fact that the Indian healthcare infrastructure is grossly under developed, demand leads supply and there exists considerable shortage of quality healthcare services.

We at Fortis recognise the opportunity, and are inclined to aggressively grow, both network and revenues, in the next few years to leverage on the growth opportunity. This strategy has already seen your company grow to 46 hospitals, since the opening of our first hospital at Mohali in 2001. The company intends to be a 40+ hospital network with more than 6000 beds by the year 2012.

Moreover, supplementing the expansion is the advancement in productivity through standardised and accredited operating systems to handle more patients using the same resources. We at Fortis are evenly poised to aggressively expand our network, establish brand leadership and emulate a business model which generates adequate returns to shareholders. This will see the emergence of Fortis as a new leader in the Indian Healthcare space.

Quality Healthcare Focus - A key differentiator :

Indian healthcare delivery is dominated by public hospitals, trust hospitals and other unorganised private hospitals/nursing homes. A recent sector study indicated that of the private infrastructure, 84% are facilities with less than 30 beds! Majority of these facilities are devoid of quality standards and offer a very basic service quality. The emergence of large corporate hospitals offering best-in-class services with a focus on service quality is still a recent phenomenon and is largely available only in localised urban locations.

Fortis is establishing a network of healthcare facilities with a commitment to clinical and service quality leading to a higher degree of safety, better outcome and an overall delightful patient experience.

The company is also closely working with other leading healthcare providers and the Quality Council of India (QCI) in promoting quality in the Indian healthcare space. We have worked with the QCI to generate quality standards and an accreditation system (NABH) which is practical and affordable.

Shortage of skilled and trained manpower :

The raison-de-etre of the healthcare industry is the treatment and care provided to patients. Quality care can only be delivered by high quality medical experts backed by a well-trained support staff, robust infrastructure and efficient systems and processes. The growing need for healthcare in India needs to be well supported by increasing capacity and infrastructure for medical education. Basis international staffing norms, India by the year 2012 needs 1.6 million doctors and 2.6 million nurses. The current numbers of doctors and nurses are less than 50% of required levels. The existing network of medical and nursing schools is inadequate for providing qualified staff in these numbers. This leads to a significant gap in the emerging need for talent vis-a-vis the current availability in our country.

We are closely watching the developments in medical education space and are actively exploring opportunities to invest in medical education facilities to ensure the availability of qualified and trained manpower for all prevailing and future needs.

Fortis, with its brand image and large network, is viewed as an employer-of-choice by the medical and non-medical fraternity. Within our network, we are focusing on academics and on partnering with educational institutes and research centres to tap into their pool of talent.

Public-Private Partnerships :

Fortis is also committed to partner with the Government to expand the reach and expertise of its network. The sector requires increased participation of organised players to offer their expertise in managing a quality setup, and the Government is encouraging such participation in the form of public-private Partnerships. The government has set up a large infrastructure which is not efficiently fulfilling the country’s healthcare requirements. Private sector’s intervention will become increasingly imperative to bring efficiencies to the system.

We at Fortis are already working with various state governments to develop workable models in the area of public-private partnerships. We currently have two facilities in Vashi and Raipur working successfully in partnership with the respective governments. We recognise that the country requires many more such projects to help meet the growing underserved healthcare requirements, and are committed to support these initiatives.

Healthcare costs in India are still funded through individuals or public money, and the penetration of health insurance is still very low as compared with global standards. The health insurance sector is bound to grow, and is the key in offering healthcare services to the masses. The Indian government has also recognised this fact, and is also taking the role of a health insurer in many states like Karnataka, AP, etc. We expect health insurance to spread and to grow and over time cover a majority of the population. Your company shall be working with partners to design suitable service offerings in this arena.

Fortis has been one of the fastest growing healthcare companies in India, and will continue to do so! We have significant brand presence through our aggressive pursuit for quality accreditation and certifications. Our vision is to have the “Fortis” brand synonymous with best quality healthcare with a widespread network. The company also has international aspirations in terms of served patients, and with leading accreditations (JCI, NABH, etc), is rightly placed to offer unbeatable Medical value travel propositions. We already cater to international patients, and with the economic pressures being faced by western economies, we are ready to play a larger role in providing quality healthcare services at attractive value propositions.

Fortis aspires to adopt best corporate governance practices. Our strong Board of Independent Directors advises and guides us on policies and proposals made by the operating management. The board, acting through empowered committees, also oversees the operations and management of the company. The committees also guide the management to continuously upgrade standards, highlight any potential conflicts of interest, and ensure that fair disclosures are made at all times. The company also adopts a robust risk management practice with aggressive screening, constant monitoring and mitigation planning.

The company has a vision to be one of the largest and most reputed healthcare companies in India, and I can confidently say that we are on course in our pursuit. The company has successfully completed a Rights Issue of approximately Rs.1000 Crore to fund future expansion and to meet our growth requirements.

In the end, I would like to specially thank all of you for your confidence in the company, and solicit your continuous and unstinting support in our future endeavours.

Warm Regards,

Malvinder Mohan Singh
Executive Chairman
Fortis Healthcare Limited.